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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I'm currently in full time work earning a gross of £42,500.

Resolved Question:

Hi. I'm currently in full time work earning a gross of £42,500. I've also been offered some freelance work and would expect to make around £4000 in a year if I were to take it. My issue is the tax. Would I just take off 20% of the freelance wage and send that to the tax man? The tax from my full time job is taken off monthly by PAYE.
Thanks
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.

Hello and welcome to JustAnswer. I am here to help you. I will review your question and will respond to you shortly.

Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your question.

I presume you have been offered freelance work by an organisation other than your employer. Please confirm this is the case and i will respond accordingly.

Many thanks

Customer: replied 1 year ago.
other than current employer.
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply.

First of all, you need to register for self assessment to enable you to file a tax return unless you are already registered and file your tax return. For freelance work you are deemed self employed.

Registering is a relatively straight forward process and more information on this can be found here

https://www.gov.uk/register-for-self-assessment/self-employed

As far as deduction of tax on freelance income goes.. if you are self-employed then you would receive your fee income gross in most cases (unless you are in construction industry). You will file your accounts on supplementary pages SA103 along with the main tax return on an annual basis. Your tax caluculation will be done once the tax return is submitted and you pay your tax on freelance income by 31 Jan of the following year. As an example say you file your tax return for current tax year sometime between Apr-Oct 2017. The tax on freelance income would be due by 31 Jan 2018. You would simply not deduct 20% of the income and send it to the tax man.

More information on how tax payments etc work in self assessment are covered here

https://www.gov.uk/self-assessment-tax-returns

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.
Ok thanks. But will my full time employment tax be affected? I mean will they start taking more tax off my monthly wage if I begin to do freelance? Or will that not be affected?
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply.

The tax you pay on your full time employment should not alter.

Your total earnings are likely to be around £46,500. There would be some business expenses you could charge against your freelance income and let say the profit from freelance income is £3,250 after expenses.

This makes your income (42,500+3,250) £45,750. Your taxable income becomes (45,750-11,000) £34,750. About £2,750 would suffer tax at 40% and not 20% (this additional tax arising from income from freelance work).

I hope this is helpful.

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